H'w'd worries where its juvenile aud is

If parents are perplexed by the behavior of their kids (especially the little kids), they may feel some relief from the fact that showbiz congloms have been scrupulously studying the wee ones — and they don’t understand them either.

There is a new generation, aged 2-12, who have been immersed in media practically from the womb. The result is a change in self-image and relationships that marketers call KGOY, or “kids getting older younger.”

The phenomenon is confounding Hollywood, which has been wooing children with formulas that have worked for decades. But they don’t always work any more.

A decade ago, plush toys for “The Lion King” contributed an estimated $1 billion in pure profit to Disney. And the toys subtly encouraged kids to see the film again and again — and to get their parents to buy the video.

But dolls, action figures and stuffed animals that once were targeted at 8- to 10-year-olds are now selling mostly to tots under the age of 6. Kids older than that are increasingly going for digitized entertainments — Web sites, videogames, DVDs and iPods. With a smaller target audience, toy sales are slipping. For example, action figures plummeted 9% last year, while youth electronics soared by an astounding 22%.

Kids always get obsessed. But instead of getting obsessed with the coolest toy available, they’re increasingly spending their time customizing their MySpace pages and asking for digital cameras and cell phones. Even infant play mats come equipped with MP3 players. Tykes don’t want to be passively entertained. They are customizing their entertainment, playing online games, building iTunes playlists and avidly multitasking.

“Kids are more powerful than ever before,” says Leigh-Ann Brodsky, prexy of Nickelodeon and Viacom Consumer Products. “They are able to get content and make it their own. That’s a scary thing for people who own properties but it’s also good for us because kids are more invested in the process and feel more connected to it. Now it’s up to us to come up with strategies to take advantage of that.”

Jessi Dunne, executive VP of global toys at Disney, adds: “There used to be a formula, but not so much anymore. Now, it all comes down to play patterns” — trade jargon for what kids like to play with and how they play with it.

The tremors are resonating in particular with tentpole properties. Greenlighting movies with nine-figure budgets is never easy, but the toughest job in Hollywood may be trying to gauge what kind of play pattern will emerge 18-24 months hence — and exactly how old that elusive target audience will be. Megapics like “Superman Returns” and “King Kong” proved to be disappointments on the toy sales front.

Consider this rapidly changing landscape:

  • The average child consumes 45 hours of screen media a week, according to recent studies.

  • Toy sales remain stubbornly flat. Licensed toys — including movie and TV merchandising — typically account for about 25% of total annual toy sales. In 2006, the figure hit $22.3 billion, according to the NPD Group. That’s still a hefty chunk of change, but Hollywood is worried that this once-formidable source of income is increasingly vulnerable.

  • Kids TV is booming but very competitive, and ditto for feature animation. In the red-hot preschool TV category, for example, more than 50 shows now air every day for the 2-5 audience. It’s a key demo for Hollywood, as the Census Bureau projects the population of kids 5 and under will grow by 5.5% by 2010.

  • As Web sites divert kids’ attention from screen fare that might have broken through just a few years ago, media congloms have largely been slow to respond.

At the 104th annual Toy Fair in New York, held Feb. 11-14, Hollywood gauged reaction to this year’s crop of hopefuls — especially properties that are new (“Ratatouille”) or newly reactivated (“Transformers”). It’s not clear yet whether these and other comers, like the new “Fantastic Four” and “Spider-Man” pics, will be able to buck the downturn as “Star Wars” did in 2005.

Studio execs who grew complacent in the autopilot boom times of the 1980s and ’90s, repeatedly pushing the same Happy-Meal-and-plush strategies, are trying to dramatically overhaul their thinking.

“We are going through a sea change,” says Al Kahn, CEO of 4Kids Entertainment. “It’s age compression and also age distraction. If you could either control one action figure or control 10,000 figures on a screen, which one would you pick?” 4Kids’ properties include Yu-Gi-Oh, Winx, Cabbage Patch Kids and the Teenage Mutant Ninja Turtles. The Turtles, a live-action film hit for New Line in the 1990s, is getting a reincarnation March 23 as a Warner Bros./Weinstein Co. CGI release.

As the Toy Fair made clear, there is another confusing element. While kids are getting sophisticated faster, adults seem to be prolonging adolescence. Adults — from post-college slackers living at home to baby boomers — are proving avid toy collectors.

“It’s the ’40-Year-Old Virgin’ phenomenon,” as one toy vet puts it. “Adults, thanks to eBay and the mainstreaming of comic book culture, are more open about collecting toys, especially for films with nostalgic appeal.”

Dave Imhoff, a senior exec VP at New Line, witnessed the trend with the “Lord of the Rings” trilogy. “This is a generation that hasn’t had to put away its toys,” he says. “The collecting of toys gives you another audience to sell to. Ideally, you can interest both a young boy or girl and their mom and dad too.”

This two-pronged appeal could work in the favor of “Transformers,” which has an unorthodox development history that shows the traditional prominence of toys in Hollywood and the desperation to exploit any known property no matter its source.

“Transformers” was a successful 1980s animated series for kids, launched as children’s TV was being deregulated, a move that also cleared the way for other shows like “My Little Pony” and “G.I. Joe,” which functioned essentially as 23-minute toy ads. A feature-length animated version of “Transformers” released in 1986 had voices supplied by, among others, Robert Stack, Leonard Nimoy and Orson Welles, and mustered just $5.8 million at the domestic B.O.

Paramount and DreamWorks are hoping for significantly higher returns with the new version, a live-action pic helmed by Michael Bay. The project began in much the same inside-out fashion as the original TV show, with toy giant Hasbro, through its reps at CAA, shopping the remake concept. Steven Spielberg, not only a fellow CAA client but also a collaborator with Hasbro since “Jurassic Park,” went for it and the project gradually gained scope.

Among the cooks in this $150 million-plus kitchen: producers Lorenzo DiBonaventura, Don Murphy and Tom DeSanto, Hasbro COO and exec producer Brian Goldner, and major product sponsors like General Motors and Pepsi. The film’s greenlight was in doubt until well after Brad Grey was installed as Paramount’s CEO and the studio acquired DreamWorks.

Twenty-five minutes of footage from the film, which opens July 4, was shown at Toy Fair on Feb. 13 along with the toys themselves. The quirky event, held for a select crowd mostly from the toy biz, took place at Lincoln Center’s Walter Reade Theater, the artfilm temple where helmers like Aki Kaurismaki and Mamoru Oshii typically rule.

The unsinkable Bay got star treatment from the crowd, which applauded the four extended sequences. “It’s a fun, four-quadrant movie,” Bay said. Goldner from Hasbro called it “toyetic” — which it should be, since it’s based on toys.

Summer will bring other well-established properties to the bigscreen, among them “The Simpsons.” When it finally arrives at megaplexes this July, it will have run for 18 years and more than 400 TV episodes. Retail revenues of $6 billion and counting will give the film a lot more leverage than would a brand-new property. Retail stores often favor established properties for prime shelf space.

The opposite challenge is confronting Disney, which releases “Ratatouille” in June. The premise is pure Pixar: A rat, Remy, lives with his family and friends underneath a restaurant in Paris and dreams of becoming an elite chef. The toy prospects would appear to be iffy, especially in the wake of DreamWorks Animation’s estimated $100 million-plus write-down on “Flushed Away,” also a charming-rodent pic.

“When we first heard that the next summer animated film was about rats, we all said, ‘Uhh …’” Disney’s Dunne recalls. “Would a child who hasn’t seen the film want to grab a plush toy that’s a rat instead of Winnie the Pooh? Probably not. But now that I’ve seen 15 minutes of the film, I think it’s really wonderful and I feel confident trying to persuade retailers to commit.”

Among the “Ratatouille” items at the Mattel showroom on West 35th Street was Little Chef Remy, based on the main character. Unlike inert stuffed dolls of yore, Little Chef Remy is animatronic. He wiggles his whiskers, swivels his hips and cries out phrases like “smells delicious!” when he senses something under his nose.

Disney is coming off a major success with “Cars,” which has passed $900 million in merchandise sales since the film’s release last summer (double its worldwide theatrical cume). It failed to register in toyland with “Chronicles of Narnia,” however, with ho-hum toy sales that lagged behind its hefty global B.O. haul.

That schism between B.O. and merchandise has always existed — the Indiana Jones films famously stiffed in toy stores, for example — but it’s becoming more frequent, veterans say.

Pixar properties initially bedeviled Disney toy mavens. The animation house was so untested in 1995 that “Toy Story,” itself a sort of extended toy-ad-with-narrative, had no extra support from the major toymakers whose wares were featured in the film. And “Finding Nemo,” Dunne recalls, was slow to catch fire in stores despite a $330 million domestic take. “The knock was, no one would want to take a fish to bed like you do with a teddy bear,” Dunne says. She plans to remind anyone who missed out on “Nemo” to bet on the upside of “Ratatouille.”

Shepherding toy lines requires that kind of long-run vision, a rare commodity on studio lots obsessed with the hot script du jour or the young actor whose horror movie just racked up 10 million DVD units.

“We’re the ones stabbing into the dark, when there’s just a rough treatment or even a pitch to go from,” says Elie Dekel, exec VP of licensing and merchandising at Fox. “We have to anticipate what’s coming. On some animated films, new characters emerge or get edited out or ones you thought would talk get their voices taken away.”

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